EROI: definition, history and future implications Charles A. S. Hall State University of New York College of Environmental Science and Forestry Syracuse, N.Y. Cutler J. Cleveland Director, Center for Energy and the Environment Boston University Boston, Mass. Presented at ASPO -US conference Denver November 10, 2005

I. DEFINITION of EROI (Sometimes EROEI) Energy return on investment for an activity: Energy delivered to society Energy delivered to society EROI = __________________________ Energy put into that activity Energy put into that activity Usually consider energy invested from society

 We believe EROI will be one of the most important defining issues of the future  Its importance has been submerged by the (inappropriate in our view) increasing dominance of economic cost-benefit analysis

II. SOME HISTORY  I am an ecologist, fascinated by energy and natural selection  A predator, such as a trout or cheetah, cannot expend more energy in chasing prey than it gets from that prey……  (And it must also pay for its own repair, depreciation, replacement and R&D)

 To my knowledge EROI idea was first formally put forth in my PhD dissertation… for fish migration  Idea was implicit in writings of Kenneth Boulding, H.T. Odum, others

We used Yield per Effort concepts from fisheries…..

For the past three years the expenditures to look for oil have been greater than the dollar returns! Hall & Cleveland 1981 Science NY Times Oct 10, 04

US Oil Field Size

 We and our students/colleagues undertook other such EROI analyses

THE ECONOMISTS’ ARGUMENT Technology will overcome depletion Depletion is real and will overwhelm Depletion is real and will overwhelm technology technology Who is right?? Who is right?? THE GEOLOGISTS’ ARGUMENT

 For oil it is clearly depletion:  In 1930 U.S. got 100 barrels of oil back for each barrel invested in seeking it (EROI = 100:1) (EROI = 100:1)  In 1970 about 25 for 1  In 1990s about 11 to 18 for one  Much less for finding new oil (EROI = 3:1??)

Humans use high quality, low cost resources before low quality, high cost resources Best-to-worst ordering of resource exploitation WHY? “Best First” Principle

The energy cost of getting the next barrel is going way up

III. MEASURING EROI: SOME IMPORTANT ISSUES Data quantity and quality Data quantity and quality (Can you help us?) (Can you help us?) Energy Quality Energy Quality Boundaries Boundaries Support Support

1) Data: U.S. Bureau of Commerce, 1) Data: U.S. Bureau of Commerce, Wood Mackenzie, John S. Herold Wood Mackenzie, John S. Herold 2) Quality of energy in or out: 2) Quality of energy in or out: Putting in one unit of electricity to Putting in one unit of electricity to generate three units of heat does generate three units of heat does not make sense 3) Boundaries: key issue. How far do not make sense 3) Boundaries: key issue. How far do we extend boundaries of analysis? we extend boundaries of analysis? Are there “correct” boundaries? (no) Are there “correct” boundaries? (no)

??

How much of Katrina’s cost was due to oil exploitation in S. Louisiana?

Support :  Here are the greatest names in Energy Research in my opinion:  Cutler Cleveland  Robert Kaufmann  Robert Herendeen  Robert Ayres  Colin Campbell  Jean Leherrere

 The total they received for undertaking their “energy cost” research from governmental, industry or private sources?  Until last week $800.00

EROI will strongly influence:  Net economic growth  Cost of government: i.e. school bus fuel  Ability to pay back international debts  Ability of conventional economic models to work  Value of pensions

EROI of US will be affected strongly by:  Prices of imported fuels vs exported grains, Boeing planes, Hollywood stuff…  Need for liquid fuels  Need for backup/storage of e.g. solar  Technology: role is not clear

 We are setting up new institutes and a consortium at ESF and Boston University (etc) to study EROI and other aspects of energy futures.

THE END Thanks to the Santa Barbara Family Foundation